Whilst we could be doing ourselves out of a job with this blog, we do like to impart the knowledge we've gained from our years working in the nationwide debt collection agency industry.
It's good to look around and see what works, and what doesn't, when it comes to debt recovery. We're happy for you to borrow, steal and share our tips below to help your business avoid the pitfalls of bad credit control and protect yourself from slow paying debtors.
Best practice is all around you if you look hard enough. Learn from the best. Here are a few of the measures some businesses have employed to keep their cash flow controlled and healthy:
- Restrict who can process orders in your business. By keeping order processing within your accounts department only, you can keep a tight reign on any suppliers who don't pay to your terms by either withholding the ability to order or reducing their credit term privileges with you. Sales people might not like it but a sale is worth nothing until it is paid. You will see late invoices reduce significantly when your customers understand the repercussions of overdue payment.
- Become a pest. If your customer is not paying on time, keep chasing. Very often, the creditor who shouts loudest, the most frequently, will get paid. Early, regular chasing will pay off and potentially save you from problems that could arise from customers at risk from liquidation.
- Take a look at your debtor reports and make tough decisions. If you have persistent late payers, get rid of them or renegotiate payment terms. Turn them into pro-forma customers if you need to. If they aren't happy to pay you on time, or in advance, let them go to your competitors. By tightening up your customer base, you can improve the working capital in your business significantly and reduce the time and resource wasted on chasing debts.
In addition to our insider secrets, it's always a worthwhile exercise to think about those suppliers you always pay on time and those you know you can tow the line with a little. What is it about your suppliers that affects your own payment behaviour? How can you use that insight to your own advantage when setting your company's payment terms?
We'll continue to share tips in our forthcoming blogs but if you would like specific help with difficult debt recovery, please contact P&J today.
